By ESG Analyst Yuke Zou
On November 5, 2024, after sweeping all seven battleground states, former President Donald Trump defeated Vice President Kamala Harris, securing his return to the White House. As countless eyes around the world closely monitored the poll results, many uncertainties began to unfold as the election result was announced. Given the opposing views of the Democratic and the Republican Parties on sustainability and environmental policies, many are concerned about the future of the United States’ climate goals. Trump’s stance, which includes prioritizing fossil fuel over renewable energy and rolling back environmental subsidies, has amplified these concerns. Will the United States exit the Paris Agreement again? Will Trump dismantle Biden’s progress in combating climate change?
Trump’s Energy Legacy Revisited: Money First, Environment Later
During his first term, Trump’s energy policies and deregulatory agenda marked a significant shift from international climate initiatives, prioritizing economic growth and energy independence over environmental protections. In 2020, under Trump’s administration, the United States became the first country in the world to withdraw from the Paris Agreement, a global treaty established in 2015 to combat climate change by reducing greenhouse gas emissions. As one of the largest producers of carbon dioxide, this decision highlighted Trump’s effort to shape the United States as a dominant player in the global energy market.
In addition to exiting the Paris Agreement, Trump’s administration pursued a deregulatory agenda to remove barriers from energy production and economic growth. Trump loosened offshore drilling safety regulations and opened up federal lands and reserves for extractions, including the Arctic National Wildlife Refuge, the Tongass National Forest, and more than 18 million acres of land in the National Petroleum Reserve in Alaska. Trump also authorized policies that expanded drilling activities on lands that are significant to Indigenous communities. He approved the Keystone XL pipeline project that proposed traversing the territories of the Fort Belknap and Rosebud Sioux Tribes, raising concerns over violating treaty rights and risks to clean water resources. Despite this approval, the Keystone project was overturned in 2021. This “money-first, environment-later” deregulatory agenda involved more than 100 regulations, impacting not only drilling and extraction but also regulations on air emissions, water pollution, toxic substances, and infrastructure planning.
At Risk: The United States’ Current ESG and Renewable Energy Efforts
Since Biden took office in 2021, the executive office has reprioritized advancing ESG and renewable energy initiatives. Keeping his campaign’s promise, in February 2021, Biden led the United States in officially rejoining the Paris Agreement, demonstrating his administration’s commitment to combating climate change and fostering a more sustainable future. In November 2021, the Biden administration reinforced this commitment through the Bipartisan Infrastructure Law (BIL), also known as the Infrastructure Investment and Jobs Act (IIJA). It is a forward-thinking investment in sustainability and economic resilience that focuses on addressing environmental issues and renewable energy. This legislation is one of the largest investments in the United States’ history to tackle legacy pollution by reclaiming abandoned mines, sealing orphaned gas and oil wells, as well as cleaning up contaminated sites. The Infrastructure Investment and Jobs Act modernizes the country’s power infrastructure and implements advanced technologies to provide clean energy and support a net-zero future.
While the BIL laid the groundwork for addressing the United States’ environmental challenges and modernizing the nation’s energy system, the Biden administration took an even more ambitious step in 2022 with the Inflation Reduction Act (IRA). Building on the progress of the BIL, the IRA continues to focus on cutting greenhouse gas emissions and supporting clean energy investments. The IRA provides $250 billion to repurpose and upgrade outdated energy infrastructure and allocates about $216 billion in tax incentives to encourage private sector investments in renewable energy and manufacturing. Both BIL and IRA aim to promote the adoption of electric vehicles (EV), a cleaner alternative to traditional fuel-powered cars that significantly reduce carbon emissions. The IRA offers tax credits of up to $7500 for EVs, intended to accelerate the transition to sustainable energy through consumer incentives. Meanwhile, the BIL complements this effort by investing $7.5 billion to develop a nationwide network of EV chargers, supporting the infrastructure necessary to enable widespread EV adoption. As a result, EV sales reached record highs in 2023, representing 7.6% of total vehicle sales in the United States.
Biden’s energy policies and climate-focused agenda prioritized renewable energy development and sustainability over fossil fuel dependence, contrasting with Trump’s “money-first, environment-later” approach. The Biden administration revitalized the United States’ role as a global climate leader while pursuing ambitious domestic initiatives to stride toward a cleaner, more resilient energy future.
ESG and Corporate Climate Goals: The Uncertain Path Forward
As the political landscape shifts with Trump’s return to the White House, uncertainty arises with the future outlook of ESG and corporate climate goals in the United States. While Biden’s administration implemented ambitious renewable energy policies and stronger corporate commitments to sustainability, Trump criticized Biden’s electricity regulations as “industry-killing, jobs-killing, pro-China, and anti-America”. Trump’s pro-fossil fuel stance and deregulatory approach further raise questions about the future direction of the United States environmental policies and efforts to combat climate change.
In alignment with his pro-fossil fuel agenda, Trump named Chris Wright as his energy secretary, a decision that has drawn significant attention. Wright, the CEO of Liberty Energy, the second-largest hydraulic fracturing company in North America, has completely dismissed the concept of clean energy, asserting that all forms of energy are essential for modern society. His stance signals a potential shift away from the renewable energy priorities established under Biden’s administration and raises questions about the future of the United States’ energy policies.
In the time of uncertainty with changing political landscape, corporations will continue to play a crucial role in shaping the future of ESG and climate goals. Many firms are likely to maintain their ESG commitments due to regulations and growing pressure from investors, public expectations, and fluctuations in the international markets. Furthermore, as sustainable development gains global prominence, the United States risks facing potential global competitive disadvantages in renewable energy technologies, especially when countries like China and members of the European Union race to dominate the global market.
While the United States navigates this period of political transition, the future outlook of ESG and environmental policies remains uncertain. For the United States, the challenges ahead lie in accommodating domestic policies with global climate commitments and ensuring the private sector remains accountable in addressing the urgent need for climate action. . Trump’s second term will ultimately determine whether the United States can maintain its progress toward a more sustainable future or risk falling behind in the global race for renewable energy leadership.
References
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- Bird, Lori, et al. “Growth of Renewable Energy in the US.” World Resources Institute, 7 February 2024, https://www.wri.org/insights/clean-energy-progress-united-states? Accessed 15 November 2024.
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- “Credits for new clean vehicles purchased in 2023 or after | Internal Revenue Service.” IRS, 8 August 2024, https://www.irs.gov/credits-deductions/credits-for-new-clean-vehicles-purchased-in-2023-or-after. Accessed 15 November 2024.
- “The Inflation Reduction Act: Here’s what’s in it.” McKinsey & Company, 24 October 2022, https://www.mckinsey.com/industries/public-sector/our-insights/the-inflation-reduction-act-heres-whats-in-it. Accessed 15 November 2024.
- “The Trump Administration Rolled Back More Than 100 Environmental Rules. Here’s the Full List.” The New York Times, 20 January 2021, https://www.nytimes.com/interactive/2020/climate/trump-environment-rollbacks-list.html. Accessed 15 November 2024.
- “US rejoins Paris accord: Biden’s first act sets tone for ambitious approach.” BBC, 19 February 2021, https://www.bbc.com/news/science-environment-55732386. Accessed 15 November 2024.